Coal’s Trump-Bump: Is it Real? Can it Last?

August 18, 2017

Not long ago liberals hailed the demise of coal as inevitable while the Obama Administration strangled the industry with regulation. But don’t look now, Tom Steyer, because coal is showing signs of a revival and breathing economic life into West Virginia and other coal states.

Former Environmental Protection Agency Administrator Gina McCarthy proclaimed in 2015 that coal “is no longer marketable.” She planned to be the lead undertaker. The Obama Administration worked tirelessly to fulfill her mission and may have succeeded had Hillary Clinton become President. “We’re going to put a lot of coal miners and coal companies out of work,” the 2016 Democratic nominee famously promised.

Yet the Trump Presidency seems to have lifted animal spirits and coal. Weekly coal production has increased by 14.5% nationwide over last year with even bigger bumps in West Virginia (19%), Pennsylvania (19.7%) and Wyoming (19.8%). Exports were up 58% during the first quarter from last year. Apparently coal can be marketable if regulators let it be.
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President Trump has called a cease fire to his predecessor’s “war on coal.” In February he signed a resolution repealing the stream rule under the Congressional Review Act. The Supreme Court stayed the Clean Power Plan in February 2016, and EPA Administrator Scott Pruitt is dismantling the power rule as well as the ash and mercury rules. Interior Secretary Ryan Zinke has re-opened leases and rescinded the royalty revaluation.
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This is all horrifying to the climate-change lobby, but they might note that U.S. coal exports are rising to countries that claim climate-change virtue. Exports to France increased 214% during the first quarter of this year amid a nuclear power plant outage. Other European countries like Germany and the U.K. are utilizing U.S. coal to stabilize unreliable renewable sources and make up for electric capacity lost from the shutdown of nuclear plants. First-quarter coal exports were up 94% to Germany and 282% to the U.K. Et tu, Angela Merkel ?

Coking coal used to make steel is also currently a hot commodity, and its price can soar whenever a storm hits Australia and shuts down mines as one did this spring. Metallurgical exports to China rose 357% during the first quarter. As much as Mr. Trump denounces China’s overproduction of steel, U.S. coal miners are benefitting.

U.S. coal exports have jumped more than 60 percent this year due to soaring demand from Europe and Asia, according to a Reuters review of government data, allowing President Donald Trump’s administration to claim that efforts to revive the battered industry are working.

The increased shipments came as the European Union and other U.S. allies heaped criticism on the Trump administration for its rejection of the Paris Climate Accord, a deal agreed by nearly 200 countries to cut carbon emissions from the burning of fossil fuels like coal.

The previously unpublished figures provided to Reuters by the U.S. Energy Information Administration showed exports of the fuel from January through May totaled 36.79 million tons, up 60.3 percent from 22.94 million tons in the same period in 2016. While reflecting a bounce from 2016, the shipments remained well-below volumes recorded in equivalent periods the previous five years.

They included a surge to several European countries during the 2017 period, including a 175 percent increase in shipments to the United Kingdom, and a doubling to France — which had suffered a series of nuclear power plant outages that required it and regional neighbors to rely more heavily on coal.

“If Europe wants to lecture Trump on climate then EU member states need transition plans to phase out polluting coal,” said Laurence Watson, a data scientist working on coal at independent think tank Carbon Tracker Initiative in London.

Nicole Bockstaller, a spokeswoman at the EU Commission’s Energy and Climate Action department, said that the EU’s coal imports have generally been on a downward trend since 2006, albeit with seasonable variations like high demand during cold snaps in the winter.

Overall exports to European nations totaled 16 million tons in the first five months of this year, up from 10.5 million in the same period last year, according to the figures. Exports to Asia meanwhile, totaled 12.3 million tons, compared to 6.2 million tons in the year-earlier period.

Trump had campaigned on a promise to “cancel” the Paris deal and sweep away Obama-era environmental regulations to help coal miners, whose output last year sank to the lowest level since 1978. The industry has been battered for years by surging supplies of cheaper natural gas, brought on by better drilling technologies, and increased use of natural gas to fuel power plants.

His administration has since sought to kill scores of pending regulations he said threatened industries like coal mining, and reversed a ban on new coal leasing on federal lands.

Both the coal industry and the Trump administration said the rising exports of both steam coal, used to generate electricity, and metallurgical coal, used in heavy industry, were evidence that Trump’s agenda was having a positive impact.

“Simply to know that coal no longer has to fight the government — that has to have some effect on investment decisions and in the outlook by companies, producers and utilities that use coal,” said Luke Popovich, a spokesman for the National Mining Association.

Shaylyn Hynes, a spokeswoman at the U.S. Energy Department, said: “These numbers clearly show that the Trump Administration’s policies are helping to revive an industry that was the target of costly and job killing overregulation from Washington for far too long.”

Efforts to obtain comment from exporters Arch Coal and privately held Murray Energy Corp. were unsuccessful. Contura Energy, which emerged as part of Alpha Natural Resource’s bankruptcy and restructuring, and filed for public offering in May, declined to comment.

A spokesman for Peabody Energy, the largest coal producer, though without a major export profile, said the United States was generally a “swing supplier of seaborne coal.”

U.S. Energy Information Administration analyst Elias Johnson said the U.S. coal industry may now be better positioned to meet foreign demand because U.S. miners have learned to produce at lower cost, after coming through a series of recent bankruptcies.

“There’s the possibility that the U.S. will become more of a primary player in the global coal trade market,” he said.

But he added there are also plenty of reasons the spike in demand could be temporary. For one thing, U.S. coal production and transportation costs are much higher than for other producers such as Indonesia and Australia.

Because coal can often be transhipped from European ports before it is consumed, it is also hard to determine where shipments ultimately end up.

Johnson pointed out that some of the fuel shipped into Western Europe, for example, could be making its way to other places like Ukraine, which is having trouble securing coal from its separatist-held regions.

Trump said last month that his administration is offering more coal to Ukraine, but it was unclear how, given deals are typically worked out between companies.

BILLINGS, Mont. – A judge has blocked a proposed 176 million-ton expansion of an underground coal mine in central Montana because federal officials did not consider its climate change impacts.

U.S. District Judge Donald Molloy said that officials inflated the economic benefits of the 11-square mile expansion of Signal Peak Energy’s Bull Mountain coal mine while ignoring its environmental impacts.

The judge’s order, issued Monday, bars Signal Peak from mining in the proposed expansion area pending further studies.

Molloy says the Office of Surface Mining must consider the environmental effects of shipping the fuel to customers in Asia and pollution generated in burning the fuel.

Signal Peak Vice President Joseph Farinelli says the company is reviewing the ruling and it will not immediately affect operations. The mine near Roundup employs more than 250 people.

Before 2005, US carbon emissions were marching upwards year after year, with little sign of slowing down. After this point, they fell quickly, declining 14% from their peak by the end of 2016.

Researchers have given a number of different reasons for this marked turnaround. Some have argued that it was mainly due to natural gas and, to a lesser extent, wind both replacing coal for generating electricity. Others have suggested that the declines were driven by the financial crisis and its lasting effects on the economy.

Here Carbon Brief presents an analysis of the causes of the decline in US CO2 since 2005. There is no single cause of reductions. Rather, they were driven by a number of factors, including a large-scale transition from coal to gas, a large increase in wind power, a reduction in industrial energy use and changes in transport patterns.

Declines in US CO2 have persisted despite an economic recovery from the financial crisis. While the pace of reductions may slow, many of these factors will continue to push down emissions, notwithstanding the inclinations of the current administration.

Carbon Brief’s analysis shows that in 2016…

Overall, CO2 emissions were around 18% lower than they would have been, if underlying factors had not changed, and 14% lower than their 2005 peak.

Coal-to-gas switching in the power sector is the largest driver, accounting for 33% of the emissions reduction in 2016.

Wind generation was responsible for 19% of the emissions reduction.

Solar power was responsible for 3%.

Reduced electricity use – mostly in the industrial sector – was responsible for 18%.

Without these changes, electricity sector CO2 emissions would have been 46% higher than they are today.

Reduced fuel consumption in homes and industry was responsible for an additional 12% of the overall emissions reductions.

Changes in transport emissions from fewer miles per-capita, more efficient vehicles, and less air travel emissions per-capita account for the final 15%.

10 Responses to “Coal’s Trump-Bump: Is it Real? Can it Last?”

My take, coal is done. Renewable revolution is well underway and unstoppable.
There may be a minor, temporary bump as Trump’s people remove some administrative/regulatory barriers, but the overwhelming long term decline of coal, which began in the Reagan administration, is due to economics, efficiency, automation, cheap gas, and the rise of renewables.
These are mega trends unlikely to turn around, and in fact seem to be accelerating.
Trump’s base is being fed a cruel lie that they can continue to prosper with 19th century technology.

Only question is how much Trump and co can trash America’s global technological leadership during their tenure. This is the real concern.
I have been interviewing experts looking at the global picture, and will be posting a video on where we are and where we’re going some time in September. I think the case is compelling.

For now, the carbon brief link above is worth following for a more long form analysis.

In the 70’s a report came out (don’t ask me to find it) regarding cost of regulation in the coal industry, where independent analysts pegged such at $6 per ton and industry lobbyists claimed it to be $20 per ton. Obviously it’s higher in WV, compared to WY, where they blow the heck out of a mountain and are theoretically liable for putting humpty dumpty back together again (in practice it seems it more common to extract as much profit as possible then declare bankruptcy to avoid paying remediation costs, pushing costs onto the state which now runs a 100M dollar loss per year, propping up the industry in this fashion). But the yearly variance in coal prices in discrete spots over the last 40 years is a lot greater than these regulatory costs, so the latter is not some prohibitive entity or rate limiting step, and nor would it be expected to be some savior were it done away with.

Typical propagandistic misinformation from the WSJ… the increased U.S. coal exports, if annualized, would amount to 0.9% of global coal production.

Stock traders might call it a dead cat bounce. But that would go against the desired spin of the WSJ editorial. The giveaway, if any is needed, is the use of ‘liberals’ as the fourth word of the editorial.

“This energy wealth does not belong to the government but to the people.”

It take a special kind of sophistry to come out with a line like this. Nothing accrues to the ownership class more than energy resources. And jobs: Judging by Taiwan, Japan, or Germany, natural resource exploitation is the surest way to an avalanche of good jobs high up in the valude-added chain. It would make for an interesting game to substitute other terms for “energy wealth”, like parks, the atmosphere, stock dividends, or total returns.

“European countries like Germany and the U.K. are utilizing U.S. coal to stabilize unreliable renewable sources”

This is a flat out lie. If anything, it’s gas fed plants that are fired up for vacillating supply. Coal plants are useless to compensate short term effects like wind and sunshite.

I took a look at US employment statistics and the increase in mining employment was quite small – even though that number inclused more than coal, though.

However, it is doubtful if this uptick in exports will have any knock on to employment. More overtime for heavy equipment operators maybe, but not for the people who once used pickaxe and shovel to extract the coal.